No condo market crash in the cards for Toronto

Despite widespread concern and slower
sales in major cities, a new report from the Conference Board of Canada
suggests that the condo market isn’t set to spiral downward.

The Summer 2013 Metropolitan
Condo Outlook report, released by Genworth Canada, doesn’t say the market is
due for a big upswing, but major Canadian cities (including Toronto) will stay
afloat over the next few years as population growth and employment gains keep
demand levels in line with inventory supply.

Employment is pegged to rise
modestly in the near future, or medium-term, and interest rates are expected to
only increase gradually. Population expansion and demographics are expected to
keep up demand in regional markets.

“As condo starts near past
averages and inventories edge closer to demand, we are seeing the condo market
stabilize both in terms of the price of existing units and the volume of new
construction,” said Robin Wiebe, Senior Economist at the Centre for
Municipal Studies at The Conference Board of Canada, in the news release.

“Softer prices and positive
economic factors continue to make condos an affordable way for Canadians to
achieve homeownership.”

Here’s how the major metros are
expected to fare:

Quebec
City condos are expected to see a moderate rise in average resale prices
with a 1.1 per cent boost in 2013 and 1.9 per cent increase in 2013, which
should allow demand to increase until 2016 as it catches up with supply.

Montreal’s
steady economic growth and aging population is expected to push sales, but
volume growth is expected to be a modest 1.4 per cent per year from 2015
to 2017.

Since
Ottawa was hit hard by government spending cuts, the city saw demand for
condos and prices in the city soften. However, economic growth is being
forecasted for 2014, which is expected to bolster demand and sales by 2.5
per cent between 2015 to 2017.

Toronto’s
large inventory of completed and unsold condo is often cited as a reason
to fear a market crash. Though builders are expected to be more cautious
and pull back from the market in 2013 and 2014, a stable economy and
population growth are expected to revive the sector in 2015.

Calgary
is pegged to see the highest growth in starts and resale volumes in 2014,
with price growth rising within the 2 per cent to 3.5 percent over the
next few years.

Edmonton
is expected to see balance, with the median price rising slightly in 2013
– the city’s first gain since 2007.

Since
Vancouver is by far the most expensive housing market in the country,
condos remain an affordable option. It’s expected to be a buyer’s market
in 2013, with sales and prices picking up in 2014.

Victoria
has the lowest number of starts among the cities and no growth in resale
prices or sales until 2014. The city’s high inventory of unsold new units
and limited demand due to a soft economy won’t translate into into a
revived condo market anytime soon.